Financial CHOICE Act would slash deficit by billions – CBO

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Bad news for Democratic lawmakers who revile the Financial CHOICE Act: the Congressional Budget Office believes it will reduce the deficit. In fact, according to a recent CBO analysis, the act would reduce the deficit even more than originally thought.

The CBO supplies Congress with nonpartisan budget analyses. The office originally reported that the Financial CHOICE Act – the Republican alternative to the controversial Dodd-Frank Act – would reduce direct spending by $30.1 billion and revenues by $5.9 billion, resulting in net deficit reductions of $24.1 billion.

But House Financial Services Committee Chairman Jeb Hensarling (R-Texas) requested a new CBO report after a “manager’s amendment” was added to the bill, according to a HousingWire report. The manager’s amendment would make operating costs and the collection of fees by certain regulators subject to the annual congressional appropriations process.

With the manager’s amendment included, the act would reduce direct spending by $30.8 billion – a smallish increase. However, it would increase revenue by $2.8 billion rather than decreasing it by $5.9 billion. That means that under the Financial CHOICE Act, the government would see $33.6 billion in total deficit reductions between 2017 and 2027, HousingWire reported. That’s $9.5 billion more in deficit reductions than the CBO’s initial estimates.

Most of the savings would come from eliminating the FDIC’s authority to use the Orderly Liquidation Fund and from changing how the Consumer Financial Protection Bureau and other regulators receive their funding, HousingWire reported.